How to Determine If Your Construction Project is Losing Money and How to Deal with It
How to Determine If Your Construction Project is Losing Money and How to Deal with It

How to Determine If Your Construction Project is Losing Money and How to Deal with It


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By reading the title, you probably think it is a silly question since many will answer that it is obvious. Projects lose money due to late and falling schedules that eventually lead to anticipation. Yet even the projects are finished late and lose money, and it is often only detected when the project is almost finished that taking corrective actions is too late.

You can lose money in many ways and sometimes, you do not know. Any of your construction projects are ultimately filled with risks, and these require exacting coordination since many physical assets need tracking.

So, when you manage your construction projects, make sure to determine whether it is losing money or not. Read this blog to know your best approach to managing your construction project and learn some actionable tips on dealing when losing money.

Factors that Show Your Project is in Trouble


Many metrics are crucial to a project’s success. Most of these are early indicators of an underlying issue within the project.

1. Accidents

Your aim as a contractor must complete the project without any accidents occurring. Accidents can tremendously disrupt any project. A project with tons of safety incidents typically indicates some underlying issues that can significantly impact the rest of the project’s success. 

Poor safety is a clear indicator of weaker and ineffective management, the lack of care, and absence of discipline and possibly a lack of training. If accidents keep on occurring, expect that you will lose more money.

2. Quality Problems

This leads to some reworks that cause delays and result in extra costs. Poor quality work indicates a lack of skills, poor management, and the absence of discipline and an uncaring attitude. Perhaps, even construction projects with substandard quality will indeed have their problems. 

3. Unhappy Client

Is your customer satisfied and happy? Have you talked with any of them recently? Your clients often see issues on the projects even before your construction team sees them. So, you better find out if your suppliers and subcontractors are also happy. 

As a matter of fact, an unhappy subcontractor and suppliers often indicate another problem. Oftentimes, they may feel not acknowledged or not being paid correctly. Maltreating them can also be a problem. Unfortunately, having unhappy people on your team will often lead to more problems. When it comes to expenses, you will probably spend more. 

4. High Turnover of personnel

People hate working on construction projects that are in trouble, either behind schedule or continuously losing money. However, if a crew is found leaving, there can be an indication of poor management. Lack of proper and advanced software tools like construction inventory software can be one of the many reasons. Nowadays, technology has become a critical part of everyone’s business. Your company is left behind in the industry if you still use the same traditional methods. Indeed, you are settling for less.

A high turnover of any crew disrupts your construction projects and negatively impacts overall productivity, causing delays and increasing costs.

5. Schedule slippage

This means that the projects will finish late, causing additional costs for you and your client. There are many other reasons for schedule slippage, including insufficient resources, poor management, improper planning, as well as late access to work areas and updates. It is crucial to fully understand the reasons for schedule slippage and act instantly to rectify it.

6. A huge number of variation claims

Variation claims often result from project delays. They usually indicate that your project was not scoped properly back when it was priced. It can also be due to poor management and coordination of the projects. In many instances, numerous claims that have only a little basis may turn out to be an indication that you are losing money. You will be desperate to try and recoup some of the losses.

7. Your construction team standing and sitting idly onsite

If you have lazy team members, it is a direct result of poor management and less supervision. As someone who leads the project, you are also responsible for leading your team. Make sure you discipline them. Otherwise, productivity levels decreased. Poor productivity typically results in project delays and high costs. You’ll spend more money, and you do not want that. Right?

Using reliable subcontractor scheduling software, you can best monitor your crew’s performances, designated tasks, and activities 24/7. You’ll get the latest updates and other vital data related to the projects. Truly, this all-in-one platform is all that you and your team need.                                    

Critical Areas You Need to Focus On


If you want to minimize the money you may potentially lose on your projects, below are three important areas you must focus on:

  • Risk management sleepers

Risk is a huge part of any construction project. Therefore, a considerable amount of project management for construction is managing risk. When you build a project schedule with careful planning and use accurate estimates, you can significantly eliminate the potential of many risks. For each risk, you remove or mitigate, your chances of losing money get lower. 

  • Leaking schedules

There are numerous ways for you to lose money every single day only because of a wrong schedule. The saddest part is that you are unaware of it until the construction project is over and you review the overall performance. Incomplete work sequence breakdown is one of the main culprits of this. If the work sequence and necessary steps are missing, the overall activity will fall behind the schedule.

  • Construction Tools, Equipment, Materials

Theft of materials, tools, and equipment is a multi-millionaire dollar problem in construction. Equipment/tools theft gets so much attention today because of the massive amount of money involved on a per-incident basis. However, the significant losses from theft of smaller items like materials and tools are possibly even more important considering that most are never reported. 

When you want to prevent any act of theft in your business, take good care of your company’s physical assets. Invest in the best construction inventory management software to give you clear visibility to all items, tools, materials, etc. 

Eight Tips You Can Prevent Losing Money in Projects


There are many tips on saving money while the project is ongoing. Cost reduction in the construction sector must not require you to lessen the quality of the work you do. Instead, you must still put the same effort into the construction projects while being more efficient in operations and spending. 

1. Buy Construction Materials in Bulk

Buying materials in bulk will save your project extra money since costs reduce the more you buy. If you will use a huge amount of certain items, purchasing in bulk is a great way to lessen overall costs. 

2. Improve Efficiency On-site

Improving efficiency onsite can help you lessen the wasted time that increases costs. Look for the most efficient construction equipment to get the job done without reducing quality. 

3. Implement Just-in-Time Practices

To improve your project’s profitability, you may implement leaner business practices, like a just-in-time construction material. While some tools and products will be moving to different job sites, consider using this technique for particular projects.

4. Invest in Quality Tools

The quality of the construction tools you use is as crucial as the caliber of your materials. When evaluating the quality of the tools you have, find out if any warranty is included. 

5. Know when to rent construction equipment

You do not need to purchase everything you use. If you need to use a particular piece of equipment a couple of times per year, rent to save money. A rental is an excellent option for heavy construction equipment like excavators, loaders, cranes, and more.

6. Use Tools Wisely

Manage how your construction crew use tools onsite. Create a construction inventory list that indicates how many and what types of equipment and tools you own. When any of your workers need tools for a project, let them sign out the necessary tools. 

7. Eliminate Construction Waste

Find ways to reutilize and recycle to lessen your waste removal costs. Select products that come in bulk and have less packaging. Not only can you cut down the waste onsite, but you can also save money on construction costs.

8. Plan for Change

Knowing how to keep construction costs down, do not mire yourself in choosing to bid. Some changes tend to occur while the project is still ongoing. Ideally, you must include some changes in the contractor when necessary.

Improve Profitability on Your Construction Projects – Instead of Losing Money


When you figure out ways to prevent losing money without cutting project quality, you are improving the bottom line of your construction projects. Even if you only make 1.5% profit on specific projects, growing and maintaining this ultra-thin margin becomes even more and more critical so that you can avoid losing money. 

As a construction business owner, you should know firsthand where you stand. Your goal now is to improve profit instead of losing money. One easy way to improve profitability is to invest in Pro Crew Schedule – construction scheduling software that gives you the ability to schedule and view labor, materials, inquires, reports, etc., that are easy to share and customize. 

With the right project management software in place, you can able to:

  • Stay on top of the performance and subcontracts
  • Effectively manage change orders
  • Streamline your RFIs, project documentation, and submittals
  • Access to real-time information for solid decisions.
  • Create, monitor, and retrieve project files documents
  • Monitoring of your crew members and other third-parties

Pro Crew Schedule offers a centralized source of information that will become your assurance of having a current and complete picture of your current projects. With clearer visibility and more control in every aspect of your projects, any potential errors can be significantly prevented.

Get Pro Crew Schedule now and grab a 30-day trial demo for FREE!

Key Takeaways


One of the primary goals for any construction business is to deliver quality projects and services, despite losing money along the process. Yet, it does not change that your construction company is in this business to gain more profit, not lose it! So, is your company addressing the many factors mentioned above to prevent losing money? You have to be the first person and not the last to correct these shortcomings in your construction business.

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